1) Greed is probably one of the biggest dangers to successful forex trading.
The possibility of the big winning trade that will make them rich is always looming in the mind of the novice trader and experienced trader alike. Many people look at forex trading as a get rich quick scheme rather than the legitimate business that it is. They have unrealistic expectations. There will be times in your trading career that the lure of the big payoff will tempt you. You will have your strategy in place, your trade set up, then a greed attack will set in clouding your judgment. If you want to be a successful forex trader you must learn to overcome greed and not seek the "home runs" but learn to follow a strategy that over time will regularly bring you small but consistent wins and growth of your account.
2) Fear
Because of fear, people look for the perfect forex trading system that will guarantee the most success with the least amount of risk. Fear will cause a trader to think irrationally. His judgement will be clouded. It will cause him to:
Take trades when he shouldn't
Not taking ones that he should
Exiting too early or at the wrong time when the market is going against him.
What are the causes of this fear.
a. Fear of the unknown. Specifically, fear of not knowing whether a trade will work out or not. What is the remedy?
Having an effective forex trading strategy you will have confidence that in the long run it will work out. You may have a few losses but you know that you will have more wins than losses resulting in an increase in your trading account.
b. The fact that you are risking your own money.
An old horse trader once said to me that: You learn the most about buying and selling horses when you start trading with your own money. The same is true with forex trading. When you are trading with a demo account which allows you to trade in real time but with fake money,you don't think the same way that you do when you begin to trade with real money that is yours.
How do you overcome the fear of losing your own money. Simple, only trade with money that you can afford to lose. In other words, trade with money that if you lost it would make no difference at all to your current financial life. That is why it may be best to start with a mini account that allows you to start trading with as little as $300.00. There are even brokers who offer "micro accounts" that allow you to start with $25.00.
3) Lack of patience.
Along with greed and fear, lacking patience will also sabotage any success you may have as a trader. Why is patience required? Because forex trading is boring. It is not glamorous or exciting. It requires patience to wait for the right trade to set up. The problem is that a lot of traders are anxious to make money now. They then force a trade when they shouldn't in a effort to outsmart the market. But the market will go its own way regardless of how smart you are.
The bottom line is: If you want to be successful in forex trading, you must be patient, stick to a certain strategy, practice good money management,and banish greed and fear. If you do this you will have long term success as a forex trader.
Mark Hines is a forex trader who discusses his and others experiences in forex trading. If you would like to look over his shoulder while he trades the market daily go to: http://mysimpleforextrading.blogspot.com/
The possibility of the big winning trade that will make them rich is always looming in the mind of the novice trader and experienced trader alike. Many people look at forex trading as a get rich quick scheme rather than the legitimate business that it is. They have unrealistic expectations. There will be times in your trading career that the lure of the big payoff will tempt you. You will have your strategy in place, your trade set up, then a greed attack will set in clouding your judgment. If you want to be a successful forex trader you must learn to overcome greed and not seek the "home runs" but learn to follow a strategy that over time will regularly bring you small but consistent wins and growth of your account.
2) Fear
Because of fear, people look for the perfect forex trading system that will guarantee the most success with the least amount of risk. Fear will cause a trader to think irrationally. His judgement will be clouded. It will cause him to:
Take trades when he shouldn't
Not taking ones that he should
Exiting too early or at the wrong time when the market is going against him.
What are the causes of this fear.
a. Fear of the unknown. Specifically, fear of not knowing whether a trade will work out or not. What is the remedy?
Having an effective forex trading strategy you will have confidence that in the long run it will work out. You may have a few losses but you know that you will have more wins than losses resulting in an increase in your trading account.
b. The fact that you are risking your own money.
An old horse trader once said to me that: You learn the most about buying and selling horses when you start trading with your own money. The same is true with forex trading. When you are trading with a demo account which allows you to trade in real time but with fake money,you don't think the same way that you do when you begin to trade with real money that is yours.
How do you overcome the fear of losing your own money. Simple, only trade with money that you can afford to lose. In other words, trade with money that if you lost it would make no difference at all to your current financial life. That is why it may be best to start with a mini account that allows you to start trading with as little as $300.00. There are even brokers who offer "micro accounts" that allow you to start with $25.00.
3) Lack of patience.
Along with greed and fear, lacking patience will also sabotage any success you may have as a trader. Why is patience required? Because forex trading is boring. It is not glamorous or exciting. It requires patience to wait for the right trade to set up. The problem is that a lot of traders are anxious to make money now. They then force a trade when they shouldn't in a effort to outsmart the market. But the market will go its own way regardless of how smart you are.
The bottom line is: If you want to be successful in forex trading, you must be patient, stick to a certain strategy, practice good money management,and banish greed and fear. If you do this you will have long term success as a forex trader.
Mark Hines is a forex trader who discusses his and others experiences in forex trading. If you would like to look over his shoulder while he trades the market daily go to: http://mysimpleforextrading.blogspot.com/
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